Banks are failing to properly assess whether people can repay their debts when they issue credit cards, research has claimed.

Product comparison website uSwitch.com said 88 per cent of people who successfully applied for a credit card during the past year were not asked to show proof of their annual income, beyond the figures they had stated on their application form.

At the same time 95 per cent of people were also not asked to show evidence of their outgoings.

The research came as website MoneyExpert.com and financial information group Defaqto revealed a study claiming one in ten people were hit with a penalty charge on their credit card during the past year.

Around 11 per cent of people had to pay a charge for failing to make their monthly repayment on time, or exceeding their credit limit during 2005, it said.

At the same time, one in five people admitted they did not fully understand how their credit card worked. uSwitch criticised lenders for offering people unrealistically high credit limits.

It claimed that in the run up to Christmas UK lenders issued 100 million unsolicited credit card application forms.

It said in one instance someone who earned less than £10,000 a year was offered a credit limit of between £10,000 and £12,000.

The group said if this person had spent up to this limit, they would need to use a third of their take-home pay just to reach the minimum monthly repayments on the debt, and it would take more than 28 years to clear the balance, and cost them £8,600 in interest.

The research also found that one in three people earning between £10,000 and £20,000 a year was given a credit limit of between £2,000 and £4,000.

At the same time two people who were unemployed were given cards with a credit limit of between £6,000 and £8,000.

Nick White, head of personal finance at uSwitch.com, said: "As consumer debts escalate, there need to be clear measures in place to ensure providers are lending in a truly responsible manner.

"The finding that only one in eight cardholders provided accurate salary or income details during the application process emphasises the significance of the lenders' failure to conduct proper checks.

"We are particularly concerned that those applicants least likely to be truthful about their incomes are all from the most vulnerable groups, namely the self-employed, students, the unemployed, and those on low incomes."

He said it was time for banks to put in place proper measures to stop borrowers over-extending themselves.

Sean Gardner, chief executive of MoneyExpert.com, warned consumers to make sure they understand the terms of any financial product before buying.

"A single late credit card payment can cost as much as £35. It is worrying that so many people do not feel adequately informed about their credit cards."

The research also found an estimated 4.5 million people were planning to switch credit cards early this year, while 21 per cent said paying off their credit card was one of their biggest challenges for 2006.